From retail to real estate to the business of governing, Wisconsin School of Business faculty weighed in on the impacts of the COVID-19 crisis. Read on for their thoughts excerpted below:
Jirs Meuris, an assistant professor of management and human resources and faculty affiliate with the University of Wisconsin–Madison’s Institute for Research on Poverty and the Center for Financial Security, participated in a live panel on COVID-19 and the workplace facilitated by reporter Lauren Weber of the Wall Street Journal. Meuris described how boundaries between work and home are now particularly fraught with so many employees working remotely:
Most of my research looks at employee issues and how employee well-being affects job performance and related outcomes. One word that stands out to me in thinking about how this pandemic is affecting employees is ‘uncertainty.’ Normally when people experience uncertainty in their work—such as pay or hours—they tend to remove themselves from that situation. Now people can’t get away from this kind of risk and uncertainty, so they have to find some way to cope with it. My perspective is that this pandemic has created a lot of uncertainty for people and that’s going to have a lot of devastating effects.
Physical distancing has affected not only how audit firms do business, but how younger audit professionals learn, says Emily Griffith, the Cynthia and Jay Ihlenfeld Professor for Inspired Learning in Business and an assistant professor of accounting and information systems. She shares how the pandemic has disrupted the model:
It’s a team-based approach, and the audit team is such a fundamental way that people get trained and learn how to do the job. That’s completely different now because everyone is working remotely via Zoom, so they’re having to totally change the way they do their work. It’s like anything, you establish a rapport with auditors, but no one loves when the auditor comes, right? You work really hard as an auditor to establish positive relationships, make things go smoothly, and help your clients not dread your arrival every year. Now that’s kind of all out the window.
Alex Stajkovic, the M. Keith Weikel Distinguished Chair in Leadership and an associate professor of management and human resources, and Kayla Sergent (PhD ’18), an assistant professor of management at Edgewood College, found that U.S. states with women governors at the helm had fewer COVID-19 deaths. There were several reasons for this, including the ability to bring in other voices and viewpoints:
Leaders face unfamiliar dilemmas in a crisis. This underscores the importance of a leader’s ability to foster collaboration and knowledge-sharing across teams with diverse skills. Research has shown that women tend to have a democratic leadership style, whereas men tend to have a more autocratic leadership style. Therefore, women leaders are more likely to encourage information sharing and brainstorming, increasing the probability of consensus building. Together, these qualities can improve the effectiveness of the leaders’ decision-making.
Don’t paint all of retail with the same brush, says Hart Posen, professor of management and human resources and the Richard G. and Julie J. Diermeier Professor in Business, who maintained that we will see some companies thrive while others go under as a result of the ongoing coronavirus pandemic:
COVID-19 will expedite the end of companies like Sears, Kmart, and JCPenney, wounded animals we’ve been watching die for more than a decade. They have to go. Another example is the furniture industry—it has not been particularly innovative. Regional chains have done a very poor job of being omnichannel players. Anyone fringe in that industry will be knocked out by all this. Other than companies like Wayfair and IKEA, there will be some real shake-ups going on.
Homeowners with a mortgage are not the only ones concerned about making payments during the pandemic. Some 10.7 million households are severely rent burdened (defined as more than 50% of one’s income going toward rent) in the U.S., says Mark Eppli, director of the James A. Graaskamp Center for Real Estate and a faculty associate in real estate and urban land economics. And they’re often the same demographic that doesn’t have the option to work remotely:
Those who rent are more likely to be service providers for hotels, for retail, for bars and restaurants. Those who own more often are married couples with two sources of income. Now add a pandemic with furloughs and it’s a tremendous amount of stress for renters who are the least able to weather an economic downturn.
COVID-19’s reach extends to financial reporting, and Dan Wangerin, associate professor of accounting and information systems, shared five things to know about how firms are handling the upheaval, including asset valuation:
Asset impairments, specifically those relating to areas like goodwill, are very subjective and they are difficult to audit. In Public Company Accounting Oversight Board (PCAOB) inspections, this has long been one of the number one issues where they identify audit deficiencies. It’s partly because much of this is an exercise in looking into the crystal ball: the valuations are supported by projections about the future and it’s really difficult to audit a projection where there’s not directly verifiable evidence. It’s only further complicated by the environment that companies find themselves in.
How do supply chains function during a public health crisis like COVID-19? Greg DeCroix, academic director of the Grainger Center for Supply Chain Management and a professor of operations and information management, and Pete Lukszys, a WSB senior lecturer, shared some of the collaborations they are involved with. Lukszys talked about the immense demand for personal protective equipment (PPE) as a result of the pandemic:
Masks and other PPE are coming out of U.S. producers; however, the supply of PPE isn’t being produced fast enough to match the incredible demand needed to support the anticipated number of COVID-19 cases. One thing that is helpful is the supply in the U.S. is originating from multiple companies, producing at multiple locations. If all the manufacturers were based in, let’s say, New York City, or California, or Washington state, we’d be in a lot worse situation because they would have a labor shortage. Multiple locations reduce the risk of labor shortages and mean you can get more product out.
Read more WSB faculty research on the Forward Thinking blog